How many TDS Deposit Protection Insurances are no longer valid?

The Dispute Service “TDS” recently posted on this website “TDS members need to log in to their account online and tick a box updating it to statutory periodic ( instructions are available in the Website User Manual). If you do not do this protection will end on the original end date of the agreement. We do advise that you also send the updated certificate to the tenant so they know their deposit is still protected.”

How many of their members are aware of this?

It clearly states this on their website but how many of their policy holders think to go back and check to see whether Terms and Conditions have been changed?

Earlier today I asked TDS “please advise what percentage of your members extend the protection when AST’s become SPT’s? My reason for asking this question, and my concern, is that most landlords and letting agents will not realise that this is a requirement of your scheme and the deposits will not be protected after the initial fix term. This is VERY worrying given that, for many, the 30 days will have expired, the consequences of which are the potential of being fined 3 X the deposit plus, having to return the deposit and no right to serve a Section 21 notice until the deposit has been returned, regardless of any damage that has been caused.”

No such conditions arise with the other two deposit protection scheme providers who have commented as follows:-

MyDeposits – “With my|deposits a protection remains valid in the event that a fixed-term AST reverts to a SPT. The member does not need to formally confirm the SPT extension with us nor do they need to re-issue the DPC or PI.”

DPS – Deposit Protection Service – “we do not need to be informed if a tenancy reverts to Statutory Periodic. This is the same for Enlgand & Wales & Scotland”

It appears that the scheme providers believe that legislation supports whatever the scheme rules are – however, this has yet to be tested in a Court of Law. Section 5 of the Housing Act 1988 clearly states several times that a Statutory Periodic Tenancy is a new tenancy. If this is proven still to be the case in a Court of Law it stands to reason that a judge could also rule that all deposits must be re-protected at the end of a fixed term tenancy. That would be VERY messy!

My concern, based on the response from The Dispute Service “TDS” , is whether their rules have been effectively communicated. I don’t think they would pass the test of a judge whom, if this ever gets to court, is likely to ask whether the rules are “clear fair and not misleading”.

From what I can see TDS updated their website early this year to effectively say that a deposit protected under their scheme becomes unprotected at the end of the fixed term unless they are notified. That could affect a lot of their scheme members in England and Wales if they are unaware, especially those who didn’t advise them of AST reverting to SPT’s within the prescribed 30 days.

If TDS procedures were to write to all members, before the end of the fixed period, asking them if they wanted to extend cover, I think TDS would have a good defence against any class action from affected landlords.

Could this result in litigation from both landlords and tenants?

What happens to a tenants deposit if a landlord or his agent goes bust if TDS procedures have not been followed? 

UPDATE

This statement of clarification has now been provided by the TDS and comments on this thread have been closed.

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